A stock has a beta of .92 and an expected return of 8.57 percent. If the risk-free rate is 2.8 percent, what is the stock's reward-to-risk ratio? Multiple Choice 6.27% 7.79% 5.79% 5.49% 9.32%

Q: Stock R has a beta of 1.9, Stock S has a beta of 0.35, the expected rate of return on an average…

A: Expected Rate of return on average stock = Risk free Rate + beta * Market risk premium 9% = 7% + 1 *…

Q: A stock has a beta of 1.05, the expected return on the market is 14 percent, and the risk-free rate…

A: Stock Beta is 1.05 Expected return on market is 14% Risk free rate is 7.7% To Find: Expected return…

Q: Stock R has a beta of 1.5, Stock S has a beta of 0.95, the required return on an average stock is…

A: Required rate of return is defined as the minimum return regarding an investor, which is used to…

Q: A stock has a beta of 1.38, the expected return on the market is 10 percent, and the risk- free rate…

A: Expected return using CAPM model can be calculated using following formula :- Expected return = Risk…

Q: Stock R has a beta of 2.0, Stock S has a beta of 0.45, the requiredreturn on an average stock is…

A: Calculation of difference between riskier stock and less risky stock: Answer: The difference between…

Q: A stock has a beta of 1.07, the expected return on the market is 10.1 percent, and the risk- free…

A: Beta = 1.07 Market return = 10.1% Risk free rate = 4.9%

Q: The standard deviation of stock A's returns (σA) is 34%, and the standard deviation of the market…

A: Standard deviation of stock A's returns (σA) is 34% Standard deviation of the market portfolio (σM)…

Q: A stock has a beta of 1.22, the expected return on the market is 12 percent, and the risk- free rate…

A: given, beta = 1.22 expected market return ( rm) = 12% risk free rate ( rf) = 4%

Q: A stock has a beta of 1.12, the expected return on the market is 10 percent, and the free rate is 3…

A: In this we have to use capital assets pricing formula for calculation of expected return.

Q: A stock has an expected return of 10.8 percent, its beta is .97, and the risk-free rate is 6.1…

A: Capital asset pricing model (CAPM) describes the relationship between the risk and return of the…

Q: A stock has an expected return of 14.2 percent, the risk-free rate is 6.5 percent, and the market…

A: Given: Expected return = 14.2% Risk free rate = 6.5% Market risk premium = 7.7%

Q: A stock has an expected return of 7.8 percent. The expected return on the market is 9 percent and…

A: Beta less than 1 signifies less systematic risk.

Q: A stock has a beta of 0.8 and an expected return of 10.6 percent. If the risk-free rate is 2.7…

A: Given: Beta =0.8Expected return =10.6% Risk free rate =2.7%

Q: Stock X has a 10% expected return, a beta coefficient of0.9, and a 35% standard deviation of…

A: “Hey, since your question has multiple sub-parts, we will solve first three sub-parts for you. If…

Q: The risk-free rate of return is 3.7 percent and the market risk premium is 6.2 percent. What is the…

A: The given question can be solved using capital asset pricing model (CAPM)

Q: A stock has an expected return of 16 percent, its beta is 0.45, and the risk-free rate is 6.4…

A: CAPM is an investment theory that establishes the relationship between the expected return and the…

Q: A stock has a beta of 1.2 and an expected return of 11.8 percent. A risk-free asset currently earns…

A: Portfolio refers to basket of different financial assets in which investment is made by single…

Q: A stock has a beta of 1.10, the expected return on the market is 12 percent, and the risk-free rate…

A: Given that the expected return on the market is 12%, risk free rate is 3.6% and the beta is 1.10, we…

Q: A stock has a beta of 1.1, the expected return on the market is 10.4 percent, and the risk-free rate…

A: Expected return = Risk free rate+Beta*(Market return-Risk free rate) Where Risk free rate = 4.75%…

Q: Stock Y has a beta of 1.35 and an expected return of 14.30 percent. Stock Z has a beta of 0.75 and…

A: Formula: Expected return = Risk free rate + (Beta*Market risk premium)

Q: A stock has a beta of 1.5, the expected return on the market is 10 percent, and the risk-free rate…

A: In given question we need to compute the expected return for stock. According to Capital asset…

Q: What is the required return on a stock with a beta of -0.20 given a risk-free rate of 2.75% and an…

A: Stock investments are the investments that are made by investors in the stocks of a corporation,…

Q: By how much does the required return on the riskier stock exceed the required return on the less…

A: Required return: It is the minimum rate of return an investor will seek for investing in a company.…

Q: A stock has an expected return of 13 percent, its beta is 1.35, and the expected return on the…

A: A risk-free rate of return is the return that an investor earns by investing in securities that have…

Q: A stock has a beta of 1.68, the expected return on the market is 14.72, and the risk-free rate is…

A: As per CAPM formula Expected return on stock = Risk free return + Beta*(Market return-Risk free…

Q: A stock has an expected return of 9.9 percent, the risk-free rate is 1.8 percent, and the market…

A: Expected return = 9.9% Risk free rate = 1.8% Market risk premium = 4.3%

Q: A stock has an expected return of 15.6 percent, the risk-free rate is 6.2 percent, and the market…

A: Information Provided: Expected Return = 15.6% Risk-free rate = 6.2% Market Risk Premium = 7.7%

Q: Snow Fooling stock has an expected return of 8.17 percent and its reward-to-risk ratio is 6.9…

A:

Q: Stock X has a beta of 2.5, Stock B has a beta of 0.65, the required return on an average stock is…

A: A model that represents the relationship of the required return and beta of a particular asset is…

Q: Stock R has a beta of 1.5, Stock S has a beta of 0.75, the expected rate ofreturn on an average…

A: The riskiness of security is measured by "Beta". Beta measures the volatility of the stock with…

Q: The returns on each of the three stocks are positively correlated, but they are not perfectly…

A: As per CAPM   Ri = Rf + B (Rm - Rf) Where Ri = Return on equity Rf = Risk free rate of return B =…

Q: Stock A has a beta of 1.30, and its required return is 13.25%.  Stock B's beta is 0.90.  If the…

A: Given Beta of Stock A = 1.30 Risk free Rate = 4.75% Required return of stock A = 13.25%

Q: A stock has a beta of .86 and an expected return of 8.45 percent. If the risk-free rate is 2.2…

A: Investors may manage their risk of losing amount on trade by calculating their reward to risk ratio…

Q: stock has a beta of 1.14, the expected return on the market is 10.8 percent, and the risk-free rate…

A: Beta=1.14 Return is market =10.8% Risk free rate =4.55%

Q: Stock R has a beta of 1.7, Stock S has a beta of 0.8, the required return on an average stock is…

A: The question is based on the concept of the capital asset pricing model (CAPM). CAPM explains the…

Q: Stock R has a beta of 1.5, Stock S has a beta of 0.85, the required return on an average stock is…

A: Given, beta(stock R)=1.5 beta(stock S)=0.85 Average stock=9% Rate of return=3%

Q: A stock has a beta of 1.23, the expected return on the market is 11.9 percent, and the risk-free…

A: the expected return on this stock = risk free rate + beta*market risk premium

Q: A stock has an expected return of 11.85 percent, its beta is 1.08, and the risk-free rate is 3.9…

A: Investors have different options to make investments, and the motive behind investments is to…

Q: A stock has a beta of .88 and an expected return of 8.49 percent. If the risk-free rate is 2.4…

A: The Reward to Risk ratio refers to the ratio which measures the reward or the return that an…

Q: A stock has a beta of 1.4 and an expected return of 12.7 percent. If the risk-free rate is 4.9…

A: Following details are given to us in the question : Beta = 1.4 Expected Return (ER) = 12.7% Risk…

Q: Stock R has a beta of 1.5, Stock S has a beta of 0.75, the expected rate of return on an average…

A: In this we have to calculate expected return of both stock using CAPM model and find the difference.

Q: A stock has a beta of 1.08, the expected return on the market is 10.2 percent, and the risk-free…

A: Expected return on the market (Rm) = 0.102 beta (b) = 1.08 Risk free rate (Rf) = 0.0485 Expected…

Q: A stock has a beta of 1.13, the expected return on the market is 10.7 percent, and the risk-free…

A: Beta (B) = 1.13 Market return (MR) = 10.7% Risk free rate (RF) = 4.6%

Q: A stock has a beta of 1.04, the expected return on the market is 11.75, and the risk-free rate is…

A: A stock is a financial security issued by companies to raise equity funds from the primary market.…

Q: A stock has a beta of 1.14, the expected return on the market is 10.8 percent, and the risk- free…

A: The expected return of the stock can be calculated with the help of CAPM equation

Q: The risk-free rate of return is 4.8 percent and the market risk premium is 15 percent. What is the…

A: Risk free rate = 4.8% Market risk premium = 15% Beta = 1.80

Q: A stock has a beta of 1.32 and an expected return of 12.8 percent. The risk-free rate is 3.6…

A: The slope of SML is Return of Market minus Rf. Note: Rf= Risk-free Rate SML= Security Market Line

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary. 

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.